Energy Evolution: November 7, 2005
Wholesale Electricity Prices Rise During Third Quarter
Electricity prices in the Alberta wholesale market averaged $66.79 per megawatt hour in the third quarter, up from $51.46 in the previous three-month period and $54.33 at the same time last year, the Market Surveillance Administrator (MSA) reports.
The MSA said price volatility eased with the return of significant coal units -- including Sheerness 2, Sundance 4 and Genesee 1 -- that were off line, due to maintenance, late in the second quarter.
But, average on-peak Alberta Electric System Operator (AESO) prices were up substantially in August and September, the MSA said.
The market monitor pointed out this could be attributed to the frequent forced outages at coal plants coupled with the substantial increases in natural gas prices, which drove the economics and offer behaviour for generators powered by the fuel.
Tie-line curtailments, due to maintenance, also contributed to higher prices in the quarter “as imports were less able to respond to elevated prices in the Alberta market relative to adjacent markets in late August and early September,” the MSA said, in noting it outlined some of these problems in a recent report on electricity price spikes.
The MSA’s quarterly report noted wholesale market prices were above $100 per megawatt hour for about 15% of the time compared to about seven per cent in the previous three months and a year earlier. This meant the AESO price was above that level for 173 more hours versus the earlier intervals.
As previously noted, the MSA said gas generators more frequently set the marginal price in August and September, due to forced outages at coal facilities.
Despite the gas affect on the market in August and September, the MSA pointed out the AESO price “was still strongly driven by coal generation,” which set price 57% of the time.
Gas-fired units set price 17.5% of the time at a weighted average of $130.58 per megawatt hour, the MSA reported.
The MSA said no significant new generation was brought on line during the third quarter.
Monthly average hourly system demand was lower in July, but higher in August and September.
The MSA noted demand of 7 422 megawatts was down 0.4% versus last year. August demand of 7 452 megawatts was up 0.7% compared to 2004.
September’s demand was 7 360 megawatts and increased by 0.3% versus last year.
The MSA said activity on the tie-lines between the province, British Columbia and Saskatchewan provides about 11% of the average Alberta power load.
Alberta was an overall importer for the third quarter with 72 577 megawatt hours of net imports, comprising 152 431 megawatt hours and 79 854 megawatt hours on the Saskatchewan and B.C. tie-lines respectively.
The MSA said imports on the B.C. tie-line were significantly lower than in the previous quarter.